U.S. and Iran reach agreement document; Japanese stocks hit new record highs; oil prices surge then retreat; gold prices rebound

Substantial progress in US-Iran negotiations has pushed Asian stock markets higher, oil prices down, and gold prices rebounding. Global markets are searching for a new balance as geopolitical risk is repriced.

On Monday, the MSCI Asia Pacific Index rose by over 1%, the Nikkei 225 hit a historic intraday high, led by technology stocks.

Meanwhile, Brent crude oil rose more than 2% in early trading before turning lower, dropping by 1.5% and falling below $80 per barrel; spot gold’s intraday gains expanded to 1%, while US stock futures pared earlier losses.

According to Xinhua News Agency, Iranian Foreign Ministry spokesman Baghaei stated that after 18 hours of talks, Iran and the United States reached an agreement document, which will be released by mediators Qatar and Pakistan. Qatar and Pakistan issued a joint statement on the X platform confirming the first round of high-level talks had concluded in Switzerland, with both sides aiming to reach a final peace agreement within 60 days. Technical negotiations will continue for the rest of the week.

Nikkei Hits Record High, Asia-Pacific Tech Stocks Lead

The Nikkei 225 climbed about 2% intraday to 72,752 points, setting a new record, while the TOPIX also strengthened. South Korea, with its heavy tech stock portfolio, became the standout market in the Asia-Pacific region, as the regional tech stock sub-index surged nearly 3% in one day.

Several stocks under South Korea’s LG Group jumped sharply. According to Korea’s Asia Business Daily, executives from LG Electronics, LG CNS, LG Innotek and other LG Group subsidiaries will visit Nvidia’s headquarters on Monday to discuss collaboration in physical AI and robotics. This news sent LG Electronics’ share price soaring over 12% intraday, LG CNS up 14%, and LG Corp. up 7%.

Oil Prices Spike and Retreat, Gold Supported by Safe-Haven Demand

Brent crude oil surged more than 2% in early trading, but then fell in response to progress in US-Iran negotiations, dropping 1.5% and falling below $80 per barrel. WTI crude futures previously rose nearly 3% to around $78 a barrel.

Gold prices diverged from oil. Spot gold’s intraday gains expanded to 1%, quoted at $4,185/ounce; spot silver broke above $66/ounce, up 1.85% on the day. Analysts believe that precious metals continue to be supported by safe-haven flows amid lingering geopolitical uncertainty.

The dollar index edged up 0.1%, continuing last week’s gains; the British pound softened on speculation about UK Prime Minister Starmer’s political prospects.

US Stock Futures Under Pressure, Inflation Data Is This Week’s Key Variable

US stock futures fell in early trading: S&P 500 futures down 0.4%, Nasdaq 100 futures down 0.6%, Dow Jones Industrial Average futures down 183 points, about 0.4%, though losses narrowed as the US-Iran negotiation news became clearer.

This week, the market's main focus will be Thursday's release of the May Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge. According to economists polled by FactSet, core PCE, which excludes food and energy, is expected to rise further from April.

After last week’s Federal Reserve meeting signaled a hawkish tone, markets have moved up expectations for rate hikes to as early as this October. Bond traders are closely watching personal spending data this week to judge whether the current hawkish stance is justified; the 10-year US Treasury yield jumped after resuming trading following the Juneteenth holiday.

Tom Lee, Head of Research at Fundstrat Global Advisors, told CNBC that factors like supply chain disruptions from a Hormuz Strait closure could affect the market in the future, but the current environment remains overall favorable for stocks. "I think conditions are still favorable for equities," he said, "but we don’t want to declare that the market has topped out."

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